THE NEED OF COORDINATION BETWEEN FINANCIAL AND MONETARY AUTHORITIES IN INDONESIA

Abstract

A strong legality framework requires good coordination between authorities. The role of authority is vital in the midst of an increasingly complex global financial system, with very close links between financial systems. A more integrated and independent implementing and supervisory authority for financial institutions are needed. Cooperation in regulatory development is needed to encourage innovation in financial service products. This study uses qualitative descriptive analysis to emphasize the problem of coordination between monetary and financial authorities. Several countries with macroprudential and microprudential authorities experienced significant disruptions in preventing and overcoming financial crises. This is due to the difficulty of inter-agency coordination, where accurate and timely information is not well communicated. In other words, coordination at the macro (system) level is much more important and more difficult than coordination at the micro (individual) level. Good coordination between regulators is needed to resolve problems related to prudential standards in the market and the supervisory function.